ClearScore's blockchain-based identity verification will help it take on online credit fraud:
a press release. ClearScore aims to help consumers better manage their finances by offering them free access to their credit scores. Additionally, the startup operates a financial services marketplace through which users can purchase products like credit cards and loans from a range of providers.When consumers apply for credit, financial institutions have to conduct identity checks on them, in part to weed out fraudulent applicants — a manual-heavy process.
As a result, these checks result in significant time and resource costs for lenders — and they're not even completely effective, with fraudulent applications still slipping through the gaps left by a heavy reliance on manual processes. In fact, application fraud in the UK increased 159% during 2018 to hit £29.4 million , per UK Finance.
Leveraging blockchain to create an identity data pool where multiple FIs can view identity data is one way these pain points can be resolved.RomanAgora, for example, allows credit bureaus and FIs to use an applicant's unique data multiple times, eliminating the need to identify individuals on a continuous basis.
And the company says results have been promising so far: Leveraging the platform's shared data pool has allowed ClearScore's partner FIs to increase customer conversion rates for credit products by 6%, for instance. This supportswe've seen so far: Several other firms have turned to blockchain in an effort to ease identity challenges within the financial services industry and beyond, including a proof of concept trial by IBM that saw a number of global banks participate.
Despite rapid digitization in the industry, FIs have struggled to overcome challenges when identifying consumers online — but ClearScore's latest effort could help buck that trend. In addition to ensuring credit applications aren't fraudulent, FIs have to properly identify their consumers due to variousBut a lack of standardized solutions often means FIs use their own individual and disparate approaches to identity verification, and often rely on manual processes to conduct these checks.
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